The concerns that the Jignesh Shah-promoted Financial Technologies (India) could potentially arm-twist Multi-Commodity Exchange (MCX) through “one-sided” agreements were perhaps flagged first in a due diligence by NYSE Euronext around 2007, when the global financial market group was looking to buy a stake in MCX.

According to a special audit on MCX by PricewaterhouseCoopers (PwC), in an email to FTIL’s Devendra Agrawal on November 14, 2007, Nayan Mehta, then a senior vice-president at MCX, said: “A draft agreement has been prepared. Last time, the NYSE due diligence team had mentioned that FT-MCX agreements are very one-sided and we had promised they would be rectified on renewal. Accordingly, if any change is required to be made for the above and any other reason, please let me know.”

Interestingly, NYSE Euronext, through its affiliate Euronext NV, had picked up roughly a 5% stake in MCX in 2008 for Rs 240 crore.

However, market sources said it offloaded almost its entire shareholding in MCX —possibly for about Rs 100 crore — during the October-December quarter of the 2013-14 fiscal after the Rs 5,600-crore settlement crisis at the National Spot Exchange (NSEL), an FTIL arm, flared up.

The audit was conducted at the behest of the Forward Markets Commission (FMC) after the commodity market regulator had declared Shah and FTIL ‘not fit and proper’ following the NSEL crisis.

FTIL has a 26% stake in MCX and the exchange has been heavily dependent on FTIL and other group companies for several services, including warehousing and collateral management.

Shah and former MCX MD Shreekant Javalgekar were arrested by the Mumbai police last week in connection with the scam.

The PwC report said the validity of certain agreements with FTIL was unusually long, with limited or no right to MCX to terminate the contracts.

For instance, an initial TSA signed on October 1, 2005, was valid for one year and subsequently renewed further for five years in October 2007. However, in October 2012, the validity was increased to 33 years with a provision for automatic renewals for two additional terms of 33 years in technical services agreements.

The primary reason cited during a board of directors meeting held on November 2, 2012 for the renewal for a long period was “to address the concerns of the investors raised during the IPO road-shows”.

“Details regarding the identity of these specific investors who may have raised the concerns as well as about the specific